identifying characteristics of leading hospital lab … · identifying characteristics of leading...

©2006 Chi Solutions, Inc. Proprietary and Confidential.

Identifying Characteristics of Leading Hospital Lab Outreach Programs:

A Template for SuccessApril 7, 2006

1GRAPHICS/WASH G-2/APR2006/040706_62OUTREACH_JR_LEADINGOUTREACHPROGRAMS2.PPT

Outreach Iceberg

Simple View

Reality

Get Specimen

Bill and Collect

Send ResultDo Test

Administrative

Legal StructureManagement TeamManagement StructureBilling and CollectionsCompliance

Other

Capital FundingCulture ChangeGaining Support from Senior Administration

Sales and Marketing

Sales ProgramPricingWinning Insurance ContractsMarket SegmentsID OpportunityDifferentiation

Operational

PSCs and IOPsLIS CapabilityConnectivity

– OE/RR– Interfacing

CouriersClient ServiceProduction


OutlineParticipant Overview

Success Factor ExperienceSales and Marketing

Organizational/Strategic Initiatives

Operational

Administrative

Financial

Biggest Competitive Problems

Key Advice to Others In Outreach

Summary - Critical Success Factors


Study Participants - Total

• $777 Million Total Outreach

• $29 Million per Lab

• 27 Labs Interviewed


Study Participants - Group 1

Alverno Clinical LaboratoriesHammond, Illinois

Sentara Reference LaboratoryNorfolk, Virginia

Providence Everett Medical Center - PacLabEverett, Washington

Piedmont Medical LaboratoryWinchester, Virginia

Sioux Valley Clinical LaboratoriesSioux Falls, South Dakota

Affiliated Medical Services LaboratoryWichita, Kansas

Life LaboratoriesSpringfield, Massachusetts

Midwest Clinical LaboratoriesMilwaukee, Wisconsin

Hospital Consolidated LaboratoriesSouthfield, Michigan

$237 Million Total Outreach; $17 Million Per Lab

BayCare Laboratory ServicesTampa, Florida

Legacy Laboratory ServicesPortland, Oregon

St. John HealthDetroit, Michigan

Centrex Clinical LaboratoriesNew Harford, New York

Elliott Hospital LaboratoryManchester, New Hampshire


Study Participants - Group 2

Tri-Core Reference LaboratoriesAlbuquerque, New Mexico

DSI LaboratoriesFort Myers, Florida

Oregon Medical LaboratoriesEugene, Oregon

Carilion Consolidated LaboratoriesRoanoke, Virginia

Muir Lab (John Muir Health)Walnut Creek, California

Intermountain HealthcareSalt Lake City, Utah

Diagnostic Laboratory ServicesHonolulu, Hawaii

ACL LaboratoriesChicago, Illinois

Pathologists AssociatedMuncie, Indiana

ACL LaboratoriesMilwaukee, Wisconsin

$540 Million Total Outreach; $42 Million Per Lab

North Shore - Long Island Jewish Health System LaboratoriesLake Success, New York

Baystate Reference LaboratorySpringfield, Massachusetts

MCLAnn Arbor, Michigan

Beaumont Reference LaboratoriesRoyal Oak, Michigan


Type of Laboratory

7%--14%Free-Standing Independent Laboratory Only

15%15%14%Both a Single Hospital Lab Based and an Independent Laboratory

22%14%29%Single Hospital Lab Based

41%46%36%Both a Multi-facility Core Lab Based and an Independent Laboratory

59%62%57%Independent Lab, Owned by Hospital or Health System(s)

70%77%64%Multi-facility Core Lab Based

Total(27)

Group 2(13)

Group 1(14)


Ownership

100%100%100%Total3%--7%Multiple Hospitals11%15%7%Pathology Group15%--29%Hospital19%23%14%Two Health Systems52%62%43%One Health System

Total(27)

Group 2(13)

Group 1(14)Ownership Interests


Legal Entity Employed

100%100%100%Total4%8%--Co-Tenancy (cost sharing)7%15%--501c3 (taxable not-for-profit)11%8%14%LLC (taxable not-for-profit)15%15%14%LLC (for-profit)30%23%36%C Corp (for-profit)33%31%36%Department or Division of a Hospital

Total(27)

Group 2(13)

Group 1(14)Legal Entity


Level of Profitability

100%100%100%Total15%15%14%Low (1-4%)44%39%50%Medium (5-9%)41%46%36%High (10% +)

Total(27)

Group 2(13)

Group 1(14)


Other Characteristics

0 - 601

0 - 600

0 - 61

- Ambulatory- Range- Median

0 - 70

0 - 70

0 - 30

- IRL- Range- Median

0 - 212

1 - 213

0 - 182

- Hospital Labs:- Range- Median

0 - 8417

0 - 8422

3 - 2812

Patient Service Centers:- Range- Median

111Lab Facilities:

- Independent or Free-standing Labs

85 - 2,100430

115 - 2,100512

85 - 1,000251

Entity FTEs:- Range- Median

Total(27)

Group 2(13)

Group 1(14)Factors


Sales and Marketing - Top 10 First Impressions on Key Factors for Program’s Success

Ambulatory services package - imaging, home health, scheduling patient admissions from the physician’s office, etc.

10Physician access to hospital EMR and office lab data9Interfacing to practice management systems8Pathologists’ reputation and support7Hospital/system brand name and physician loyalty6Internet connectivity offering (order entry/results reporting)5Health system urges physicians to use the system lab4Dedicated sales personnel3

Winning insurance contracts; exploiting hospital or health system leverage2Commitment to great service, including significant investment in client services1

Key Factors for SuccessRank


Sales and Marketing - Sales Program

67%15%

100%--

36%29%

Sales Manager:- Full-Time- Part-Time1

56%0 - 23

2

54%0 - 23

2

57%0 - 11

2

In-office Phlebotomists:- Range- Median

0 - 123

0 - 123

0 - 51

Number of Field Service Reps:- Range- Median

0 - 112

0 - 113

0 - 32

Number of Dedicated Sales Reps:- Range- Median

Total(27)

Group 2(13)

Group 1(14)Factors

1Part-time sales managers include lab network assigned sales manager and administrators experienced in lab outreach, although they have other duties.


Sales and Marketing - Managed Care ObservationsLab was excluded from United Healthcare contract; it is depending on lab network to win back in 2007.

Lab was excluded from large health plan owned by a competitor; the state’s attorney general advised a non-exclusive lab arrangement; the lab is now participating.

Another lab states that a United Healthcare participation loss could mean a loss of 33% of its business.

JVHL is now $40 million in lab network revenues from 14 exclusive contracts.

One lab’s market has shifted from exclusive contracts to a PPO/EPO driven market.

Another lab states they’ve not been successful winning large, national contracts.


Sales and Marketing - Managed Care Observations (cont.)

A lab makes price concessions on contracts as part of a 10-year horizon for developing geographical coverage.

One lab wins contracts by writing interfaces to healthcare plans, providing the data they need.

Another lab recommends working closely with the hospital managedcare representative to ensure being included as an outpatient provider on contracts.

One lab makes a real effort to establish awareness among its hospital owners as to how it subsidizes the health system–this is necessary to get proper support in contract negotiation.

A co-tenancy lab doesn’t worry about managed care–they are a “wholesaler by design” (cost sharing with co-tenants).


Sales and Marketing - Market Segments Served

4%--7%Veterinarians4%8%--Clinical Research Trials4%8%--Home Health Agencies4%--7%Commercial Labs4%--7%Direct Access Testing4%--7%University Student Health

52%62%43%Hospital15%15%14%Drug Screening

78%

0 - 3159

62%

0 - 3155

93%

0 - 5515

Nursing Home# Homes Serviced

- Range- Median

96%92%100%Physician

Total(27)

Group 2(13)

Group 1(14)Market Segment


Sales and Marketing - Identifying Growth Markets

First Focus on System’s

Physicians

Examine Physician Concentrations, Courier Routes, and PSC Locations

Consider Competitor Weaknesses to Exploit

Have Sales Rep(s) Probe Target Market With Office Visits

Strategy Brainstorming Meetings

Consider Parameters of System’s Strategic Plan

Use Consultants, Marketing Team, or

Both

Conduct a Formal Market Study

Implementation Plan With Financial Pro Forma

Formal Proposal and Approval Before Action

Identifying Growth Markets


Sales and Marketing - Differentiation StrategiesFocus on and deliver…

Great serviceTAT (some same-day)STAT TATExperienced client service staff24/7 supportEasy request formsEasy to read reports2-3x/day courier serviceFast access to appropriate staff

Pathologist involvementReputationAccessIncentives

Convenient PSCsPAP TAT of 3-4 daysContinuity of care

Same reference rangesAccess hospital EMR

Internet ConnectivityOE/RRInterfacing to PMSs; download patient demographicsBi-directional interface to EMRs

Sales TeamIncentives to performMTs as Consulting Med Techs (serve as paid Technical Supervisors of client POLs)

Assign to operate from system hospitals–physician relationship building

Win profitable insurance contracts Good PR program (radio and other media)Co-marketing with vendor repsConduct client satisfaction surveys every year–tout elements of highest ratings


Organizational/Strategic Initiatives -Alliances/Networks

26%

10 - 13016

8%

130130

43%

10 - 12512

Lab Network Member:- Number of hospitals:

- Range- Median

15%11%7%4%4%

8%0%

15%0%0%

21%21%0%7%7%

Alliances:Co-marketing of liquid PAPSJoint marketing of Allergy TestingMolecular Pathology Center of ExcellenceCo-branded literature with reference labPathology service competitor sends DAT1

41%16%64%Total15%8%21%Lab Network Member “Want to Be”

Total(27)

Group 2(13)

Group 1(14)

1Direct Access Testing.


Organizational/Strategic Initiatives - Acquisitions

4%0%7%Given System POLs22%23%21%Planning acquisitions2

30%46%14%Made acquisitions1

Total(27)

Group 2(13)

Group 1(14)Initiative

1$4 million lab; 3 labs–$1-2 million each; 150 nursing homes; NIDA lab; Coagulation lab; 40% of business came from five acquisitions; small local lab with large PAP volume.

2Small microbiology lab; small cytogenetics lab; looking for small labs.


Organizational/Strategic Initiatives - Multi-entity Merger/JV

11%0%21%System has merged with another system19%15%21%System has purchased physician practices44%54%36%System has purchased other hospitals19%15%21%Lab the result of a Joint Venture

Total(27)

Group 2(13)



Operational - Key Initiatives

19%30%30%7%7%7%

8%46%31%8%0%

15%

29%14%29%7%

14%0%

Production:Front-end automationTLALeanISO certificationIslands of productionNew lab facility

33%63%52%44%4%

15%15%

31%85%69%69%0%0%8%

36%43%36%21%7%

29%21%

Connectivity:Resulting onlyOE/RRInterfaces to PMSInterfaces to EMRNegotiating for a systemInterfaces to PMS/EMR plannedPlanning on OE/RR

Total(27)

Group 2(13)



Operational - Key Initiatives (cont.)

4%15%

0%15%

7%14%

Couriers:Route mapping softwareCourier management software

26%11%15%11%11%

31%8%

23%0%

23%

21%14%7%

21%0%

Molecular Diagnostics:<15 tests performed>15 tests performedNot setting up; still low paymentMolecular Center of Excellence

Total(27)

Group 2(13)



Administrative - Management Structure

41%26%11%7%7%7%4%4%4%4%

46%31%15%8%8%

15%0%0%0%8%

36%21%7%7%7%0%7%7%7%0%

Top Administrative Manager Reports To:1. Board2. System VP/EVP3. System CFO, SVP/EVP4. System CEO5. System COO6. System Medical Executive7. Hospital President/CEO8. Hospital VP, Operations9. Hospital Assistant Administrator10. Administrative Committee of Co-tenancy

41%22%11%11%7%7%4% 4%

54%23%0%0%8%8%8%0%

29%21%21%21%7%7%0%7%

Title of Top Administrative Manager:1. CEO2. VP, Lab Services3. President4. Administrative Director5. General Manager6. Executive Director7. Administrative Associate8. Laboratory Manager

Total(27)

Group 2(13)

Group 1(14)Element


Administrative - Management Structure (cont.)

100%100%100%Total

48%26%22%4%0%

54%38%8%0%0%

43%14%36%7%0%

Senior Administration Support:Very HighHighAverageLowVery Low

41%41%26%19%15%4%

38%38%8%15%8%0%

43%43%43%21%21%7%

Functions Outside Direct Management:1. Billing2. Collections3. LIS4. HR5. Sales and Marketing6. Couriers

Total(27)

Group 2(13)

Group 1(14)Factor


Financial - Access to Capital Experience

100%100%100%Total

33%7%

15%11%30%4%

31%0%

15%0%

54%0%

36%14%14%22%7%7%

Very GoodFairDifficultUse leasing/reagent rental financingSelf-fundingDon’t know, new entity

Total(27)

Group 2(13)

Group 1(14)Experience


Biggest Competitive Problems

37%37%19%15%7%7%7%7%

46%23%23%8%8%8%8%8%

29%50%14%21%7%7%7%7%

Winning Managed Care ContractsInadequate ConnectivityBig Lab CompetitionPredatory Pricing by CompetitorsAccess to CapitalClinics Starting Own LabsFacility LimitationsOther Outreach Program Competitors

Total(27)

Group 2(13)

Group 1(14)Biggest Problems


Key Advice to Others In Outreach

26%22%19%19%19%15%15%11%11%11%11%11%11%7%7%7%7%4%4%4%4%

1. Focus on Great Service2. Know How Much You Are Collecting3. Have Experienced Sales and Marketing4. Have a Good Management Reporting System5. Know Whether You Are Profitable6. Have a Good Connectivity Offering7. Join or Form a Lab Network8. Need Solid Endorsement from Administration9. Have a Reference Lab Billing Capability10. Have a Good Business Plan11. Staff With the Right People12. Critical to Change Culture13. Need a Freestanding Independent Lab14. Need Competitive TAT Schedules15. Be Sure Well Funded16. Do a Careful Market Assessment17. Bundle Lab and Other Ambulatory Services18. Track Patient Satisfaction19. Be Sure to Remain in Compliance20. Get Pathologists Involved21. Provide the Leadership to Win

Total(27)Advice (in order of mention)


Summary - Critical Success Factors

Commit to a Great Service*

Achieve High Senior Admin Support

Achieve Efficient Lab Production (Automation, Lean, etc.)

Pathologist Involvement

Full Internet Connectivity Offering

Leverage Hospital Status for Insurance Contracts

Join or Form a Lab Network if in a Managed Care AreaHave a FT or PT Sales Manager

Have Productive Sales and Service Representatives

Operate Many Patient Service Centers

Critical Factors for Outreach Success

Establish a Good Financial Management System

11

Make Acquisitions if Available in the Market

12

*Great Service is defined in Differentiation Strategies Section.

identifying characteristics of leading hospital lab … · identifying characteristics of leading...

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